How to change names on transfer of equity remortgage?

What is a transfer of equity remortgage?

In that process of adding or removing names – and whether any money changes hands or not – you are transferring equityThe difference between the value of the property and the amo... in the property. For that fact alone, you need to advise any mortgage lender with interest in the property of the proposed transfer of equityTransferring ownership of a property from one party to anoth....

If the property is already subject to a mortgage, the person transferring ownership or equity needs to be released from the contract with the mortgage lender. The mortgage lender is – in these circumstances – one of the parties involved and therefore needs to give its consent.

When considering its consent, the mortgage lender needs to assess the remaining mortgagee’s income, expenditure, and creditworthiness – in other words, the affordability of the mortgage for the remaining mortgagee. Alternatively, a new lender may be found through the application for a new mortgage.

Effectively, the property is remortgaged – a transfer of equity remortgageRefinancing an existing mortgage with a new mortgage. – with the revised names on the property’s title deedsLegal documents that prove ownership of a property. now also the mortgage holders. If the lender does not consent to the proposed transfer of equity the pre-existing contract remains, and the former joint mortgagee may still be liable for his or her share of the outstanding mortgage debt.

What Does Changing Names on a Mortgage Involve?

Changing names on a mortgage, often known as a “transfer of equity,” is the process of adding or removing individuals from the mortgage and property title. This could be needed in cases such as marriage, divorce, buying out a co-owner, or adding a co-signer. During this process, the mortgage lender must assess the financial capability of the remaining or new mortgage holder to ensure that the mortgage remains affordable and secure. This assessment typically considers income, expenses, credit history, and other financial commitments. Once approved, the new arrangement is formalized with updated names on the title deeds, legally transferring ownership and responsibility. Working with a mortgage adviser or solicitor can help navigate the paperwork and any legal requirements for a smooth transfer of equity.

How do I change names on a transfer of equity remortgage?

Changing names on a transfer of equity is a legal process. If there have been two joint owners of a property, for example, and one wants to buy out the other to become the sole owner, that requires a legal change of names and ownership.

As conveyancing specialists Really Moving to recommend, the owner who is buying out the other party must be represented by a solicitor or conveyance. The owner who is being bought out may choose whether or not they want legal representation – but, as in any legal transaction, legal advice may be the prudent choice, opening up potential job opportunities for solicitors.

Where that transfer of equity also requires a remortgage, the lender must approve the application for the addition of a new name – or the removal of a former name, in the event of a change from joint to sole ownership.

When considering that approval, the lender is going to assess the affordability of the remortgage to the new or remaining mortgagees. That assessment is similar to any other calculation of affordability – it is based on the financial status of the proposed mortgagees, including their income and expenditure, handling of past and current debt and credit, and credit ratings maintained by the credit checks reference agencies.

When the terms of the equity transfer have been agreed upon – including any payments agreed between the parties – the agreement of the current mortgage lender can be sought or a remortgage with a new lender arranged. The transfer deed on the title of the property can then be signed and witnessed. The transaction is complete. If you are interested, you can also contact any specialist mortgage adviser to help you with your application process.

Are There Tax Implications for Transferring Equity in the UK?

Yes, transferring equity in the UK can have tax implications, depending on the circumstances of the transfer.

When transferring equity, Stamp DutyA tax paid by the buyer when purchasing a property. Land Tax (SDLT) may apply if there is a financial consideration, such as taking on part of the mortgage debt or paying cash to the other party.

For example, if you are buying out a co-owner, SDLT could be due on the amount being “paid” for the transfer, even if it’s only the mortgage balance you’re assuming. However, transfers due to divorce, separation, or certain other legal agreements might be exempt from Stamp Duty.

Additionally, Capital Gains Tax (CGT) could apply if the property is not your primary residence. Consulting a tax adviser can help clarify any potential liabilities and exemptions specific to your situation.

Can a joint mortgage be transferred to one person if I am self-employed?

As explained, the transfer of a joint mortgage to a sole mortgage involves an equity transfer – the name of one of the former joint owners is removed and a single owner remains. If the property is subject to a mortgage, the existing lender must approve the transfer of equity or a remortgage needs to be arranged.

If the person who is to be the remaining sole owner is self-employed, that is taken into account by the mortgage lender when assessing the affordability of the equity remortgage.

Self-employment helps to define your financial status and many mortgage lenders these days are accustomed to assessing the affordability of loans to the self-employed. Typically, for example, that assessment is likely to be informed by 12 months of your accounts in self-employment. If you are continuing in the same line of work as when you were employed, some lenders may even reduce the full, 12-month period of accounts.

How long does a remortgage and transfer of equity take?

The individual circumstances surrounding any change of ownership of a property, transfer of equity, and remortgage are likely to differ. This affects the length of time the transfer of equity and remortgage may take.

Solicitors Irwin Mitchell suggests that the process typically takes between four and six weeks – but, of course, this may be longer if the circumstances are more complicated.

Is stamp duty payable on a transfer of equity?

The calculation of Stamp Duty on a transfer of equity may be relatively complicated. At its simplest, Stamp Duty is usually payable on the amount of mortgage debt newly taken on – by a partner taking on joint ownership of a property as a joint mortgagee, for example. In other cases, though – such as the removal of a name following divorce or separation – it is unlikely that you will need to pay Stamp Duty.

Next steps

There are a number of reasons why you might want to change the names on the title deeds to a property.

The addition or removal of names is achieved through the legal process known as transfer of equity.

Where the relevant property is also subject to a mortgage, the mortgage lender must be informed of – and needs to approve – the proposed transfer of equity. The property is effectively remortgaged.

Here at Needing Advice, we are ready and waiting to help you through any such transfer of equity – including the implications for your mortgage.

FAQs – Changing Names on Mortgage

What is a change of name on a mortgage?

A change of name on mortgage is when you add or remove a person to your mortgage. This can be done for a variety of reasons, such as if you get married, divorced, or if you want to add a co-signer to your mortgage.

How do I change the names on my mortgage?

To change the names on your mortgage, you will need to contact your mortgage lender. They will be able to give you all the information you need, including the forms you need to fill out and the fees you’ll need to pay.

How long does it take to change the names on my mortgage?

The time it takes to change the names on your mortgage will vary depending on your lender. However, most lenders will process your request within a few weeks.

What are the benefits of changing the names on my mortgage?

There are a few benefits to changing the names on your mortgage, including:

• You may be able to get a better interest rate if you have a co-signer with good credit.
• You may be able to qualify for a larger mortgage if you have multiple people on the mortgage.
• You may be able to make your monthly mortgage payments more affordable if you have a co-signer who can help you make the payments.

What are the drawbacks of changing the names on my mortgage?

There are also a few drawbacks to changing the names on your mortgage, including:

• You will need to pay a fee to your lender.
• You will need to provide your lender with proof of the new names on the mortgage.
• You will need to sign a new mortgage agreement.

What should I do if I am considering changing the names on my mortgage?

If you are considering changing the names on your mortgage, it is important to speak to a mortgage broker or financial advisor. They can help you understand the process and ensure it is the right decision for you.

Can I change names on a joint mortgage?

If you need to change the name on your joint mortgage, the process can be a bit complicated and time-consuming. The first step is to contact your lender or loan servicer and find the documents required to make the change. You will likely need to provide proof of legal documentation such as a marriage certificate, divorce decree, etc., that reflects the name change.

If you are not aware of changing the names on a joint mortgage, then you can also contact a specialist mortgage broker to help you with your mortgage application process.

What Fees Are Involved in Changing a Mortgage Name in the UK?

Changing a mortgage name, or transferring equity, usually involves several fees. You may need to pay:

•Solicitor or conveyancing fees: for the legal paperwork involved in transferring ownership and updating the title deeds.

•Lender administration fees: most mortgage lenders charge an administration fee for processing a transfer of equity application.

•Valuation fees: if the lender requires a current valuation of the property.

•Stamp Duty Land Tax (SDLT): if the transfer involves a payment or assumption of mortgage debt over a certain threshold, SDLT may apply.

The total cost will depend on factors like the complexity of the transfer and the lender’s specific charges. Consulting your mortgage provider or a conveyancer can provide clarity on the exact fees.

Are There Tax Implications for Transferring Equity in the UK?

Yes, transferring equity in the UK can have tax implications. Stamp Duty Land Tax (SDLT) may apply if there’s a monetary transaction involved, such as taking on part of an existing mortgage or making a payment to the other party. Additionally, Capital Gains Tax (CGT) may apply if the property being transferred is not your primary residence. Certain situations, like divorce settlements, may be exempt from SDLT, but it’s wise to consult a tax professional to understand any tax liabilities specific to your circumstances.